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Why Has India’s Industrial Economy Become Stagnant? -Prabhat Patnaik

-Newsclick.in

The sharp and apparently intriguing fall in industrial production in October, and feeble post-Covid recovery, points to a deep-rooted malaise in the Indian economy.

There has been much discussion in public about the index of industrial production (IIP) for October 2022 being 4% lower than the index for October 2021; and quite rightly so, since no obvious explanations like a Covid-induced lockdown or even its residual lingering effects can be adduced to explain this fall. Covid, for the present at any rate, is a matter of the past; hence such a sharp and apparently intriguing fall in industrial production in October points to something more basic, some deep-rooted malaise in the Indian economy.

But, in focussing on the immediate fall in industrial production, insufficient attention has been paid to the fact that for quite some time now there has been a virtual stagnation in India’s industrial economy. Since the government changes the base year of the IIP from time to time and since comparisons across indices are dicey, let us just take the 2011-12-based index, which is the latest we have and examine what has been happening to industrial production according to this index.

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